Budget criticised for missing key clean energy opportunities

With Treasury pledging a whopping $14.8 billion to boost fuel security amid the Middle East crisis, the 2026 Budget has been criticised or missing key opportunities to progress the clean energy transition.

Treasurer Jim Chalmers' Strengthening Australia's Fuel Resilience package promises to deliver more fuel for drivers and related industries, along with more fertiliser for farmers and ultimately fuel security for the country.

The package includes a $10 billion investment in immediate fuel supplies and a permanent Australian Fuel Security Reserve to obtain fuels and fertiliser.

"We're helping businesses and manufacturers bolster supply chains, with $1 billion in interest free loans through the National Reconstruction Fund and incentives to get more freight moving on trains and ships," he said.

"Targeted support for electric vehicles, building more charging stations, and heavy vehicle reform are all investments in our long-term fuel resilience. We'll produce more fuel through our $1.1 billion Cleaner Fuels Program, backed with reforms to our low carbon liquid fuels market to support demand."

Furthermore, some 20% of the country's gas exports will be reserved for Australian users.

"And we're making more progress on our Future Made in Australia agenda, supporting mining and processing through our Critical Minerals Strategic Reserve, and investments in domestic smelting and manufacturing," he said.

Reacting to the global oil shock sparked by the ongoing Israel-US war on Iran, Chalmers will use

Export Finance Australia's $7.5 billion Fuel and Fertiliser Security Facility to strengthen longer-term fuel security with the $3.2 billion Australian Fuel Security Reserve, "boosting energy sovereignty by making more clean fuels here, promoting electrification, and implementing a 20% gas reservation."

Climate Council Councillor Nicki Hutley said gas export taxes remain unchanged, despite analysis indicating an improved gas export levy could generate $17 billion annually, representing upwards of $50 billion in foregone revenue over the forward estimates - funding that could instead support cost-of-living relief and energy security.

The $10 billion to add just 10 days to the fuel storage was also a "missed opportunity" that could have invested more in electrifying trucks and heavy machinery that use most of Australia's diesel.

"This Federal Budget includes serious tax reform to deal with the housing crisis, but a patchwork of fossil fuel subsidies and short-term handouts that keep us dependent on fossil fuels from volatile regions," Hutley said.

At a critical moment in Australia's energy transition, Investor Group on Climate Change (IGCC) executive director of policy Frankie Muskovic said this budget presents some very mixed messages to investors.

The discontinuance of the $200 million per annum dedicated to disaster readiness, no funding for the National Adaptation Plan and the $2 billion slashed from programs accelerating the rollout of new clean energy systems were criticised by the network of institutional investors.

Conversely, maintaining the Cheaper Home Batteries program and boosting the cap on the asset size eligible for favourable tax treatment by $260 million for research and development investment concessions were welcomed.

"Overall, this budget is a big step backwards for clean energy, climate solutions, energy security and Australia's readiness for a changing climate," said Muskovic.

"The welcome fuel security package should be a shot in the arm for Future Made in Australia. Now we need to see the detail on how this will drive early-stage demand for renewable diesel and sustainable aviation fuel that could help free us up from relying on imported fossil fuels."